Reverse Loans and the Mortgage Meltdown

Because there has been so much turmoil in the secondary market for mortgages, it has resulted in some changes in the variety of Reverse loan programs that used to be available.   The trend seems to be moving away from those that are tied to the Treasury Bill and leaning to the LIBOR index for the Home Equity Conversion Mortgage , otherwise known at the HECM.

And in the last few months we have seen the Reverse Jumbo loans disappear as equity in homes has declined.  Previously these loans were a good option for the Senior who’s property value exceeded the local HUD lending limit and they allowed the applicant to receive more money than they could through the FHA loan.

Now that is no longer the case but the good news is that with the new HUD lending limit at $417,000, loans can still be done and help Seniors who are struggling under the current financial environment.

I recently participated in a Senior event in Ventura and was quite surprised how many people came up to my table (usually they avoid me) and shared with me, that they had a Reverse Mortgage and how happy they were with their decision.

I was quite surprised, because I have found that most Seniors won’t even make eye contact with me, as though I’m so sort of evil person.   It is very difficult and the biggest obstacle to get around, in that so many Seniors continue to be afraid of the loan and remain ignorant of it’s value to them.

The current financial disaster is hurting all of us but unfortunately it is hitting the Senior community the hardest. Too many of them are finding themselves without adequate funds to get through each month and are very frightened as to whether or not they will be able to survive financially and they don’t know what to do about it.

And who is going to help them?   Their children?  Probably not, because they are either losing their jobs and homes and finding out that their on 401K is disappearing and growing smaller each month.   They aren’t in the position to help their parents.

Mom and Dad are on their own.

And then I  “sigh”.   If only more of them were willing to talk to a professional Reverse loan consultant, get past the fear and find out how the loan can give them peace of mind and free them from the anxiety that they are suffering from at this time.